Raise Marketplace's $615 million valuation means further 'validation'

The highest valuation of any Midwest company that raised venture investment during Q1

Among Midwestern companies that raised outside financing in the first quarter of 2015, one stands out: Raise Marketplace.

A new report from Seattle-based private equity and venture capital research firm PitchBook Data showed that Raise achieved the highest valuation — about $615 million — of any Midwest or Great Lakes company that raised venture investment during that period.

The gift card reseller closed a $62 million Series B round in January, bringing its total funding to $87 million, said founder and CEO George Bousis ⇒.

The PitchBook report also showed that venture capitalists poured $500 million into the Midwest and Great Lakes region in the first quarter of 2015 through 93 deals. IT and healthcare companies attracted the most money — a combined $378.3 million — and deals. That lagged greatly behind investments in the Bay Area, which reached $5.4 billion; New York, which totaled $1.4 billion; and Boston, which earned $1.3 billion. The Pacific Northwest and Los Angeles raised comparable levels of venture capital at $687 million and $560 million, respectively.

Before its January funding, Raise was valued at $553 million, according to PitchBook. After, its valuation rose to about $615 million.

“For us it doesn’t really change anything,” Bousis said. “It’s just further conviction, validation around our business.” He said the investment and subsequent valuation were signs “that what we’re doing really is something special and is attracting the likes of really prestigious firms.”

Founded in 2013, Raise released an iOS app in November 2014 that contributed to a 50 percent jump in revenue that month, Bousis told Blue Sky at the time. Raise plans to release an Android version of its app early this week, Bousis said.

In 2014, the platform generated sales of more than 1 million gift cards. Bousis said sales would “quickly grow past that” this year. The Raise team has added 40 people in the past two and a half months for a total of 160. Bousis said he could add 50 to 100 more by the end of the year.

Jeremy Levine of Bessemer Venture Partners, headquartered in Menlo Park, said investors like that Raise is growing quickly yet is relatively small compared to the gift card industry as a whole. Levine joined Raise’s board of directors in 2013, after his firm invested in the company’s Series A round. BVP participated in Raise’s Series B as well.

Gift card sales in 2014 topped $124 billion, according to CEB Global. Levine said some reports estimate the gift card market is even larger and that Raise could capture a “meaningful portion” of that.

“Even if we got to 10 percent of total market it’s a very, very large business,” Levine said.

Levine said Bousis’ father, who opened his first grocery store in 1982 and launched the Cermak Produce brand in 1993, exposed his son to building a business from a young age. At age 27, Bousis is unusually mature, he said.

“When you’re building a company that’s growing really rapidly, there are a thousand little things you need to do right,” Levine said. “If you don’t make the transitions correctly ... things can fall apart.”

Bousis said he runs Raise like a family business and that he’s cautious with spending even though the company has plenty of funds.

“We look at how we can preserve the capital and how we can build a healthy and sustainable business that can eventually be a very, very big global business one day,” Bousis said.

Alex Lykken, an editor at PitchBook, said the inclusion of a new major investor in New Enterprise Associates, based in Chevy Chase, Md., helped drive up the company’s valuation. Other regional leaders are ViewRay, an Ohio-based radiation therapy technology creator valued at $195 million pre-money, and Minneapolis-based Insite Software, valued at $34 million before its latest investment.